This paper uses Carroll's (1992) buffer stock model to study government savings behavior exemplified by the Unemployment Insurance (UI) programs of U.S. states from 1976 to 2008. We find strong empirical support for the model from regressions and simulations. Empirically, we find that political consumption, defined in the context of the model from discretionary components of UI benefits and taxes, rises when savings and other spendable resources rises. We calibrate and simulate the model using the methodology pioneered by Jappelli, Padula, and Pistaferri (2008) and we find the model fits well. A key implication is that intertemporal planning by governments is expressed by a trade-off between impatience-politicians' desire to immediately expend all savings-and risk aversion-politicians' fear of running out of resources to support UI. We quantify the amount of fiscal stimulus from the UI program under buffer stock saving.
This note considers a general equilibrium model where individuals are potentially consumers, workers, and shareholders. It extends the results obtained previously by Kahloul et al. (2017) with extreme ownership structures on the majority vote between Monopoly and Duopoly, to the case of any proportion of shareholders in the population.We prove that Duopoly is preferred when non-shareholders constitute a majority of the population. Otherwise, the majority vote depends on the proportion of shareholders and the dispersion of the individuals with respect to their intensity of preference for quality relative to their sensitivity to effort.
In this paper, we theoretically and empirically analyze the impact of competition on poverty. We consider a general equilibrium framework with vertical preferences and compare poverty in a Monopoly setting versus a Duopoly setting considering explicitly the ownership structure. Poverty is measured by the size of the population living below an absolute poverty line. Theoretical results show that the impact of competition on poverty is contingent to the ownership structure, the poverty line and the relative dispersion of the individuals with respect to their intensity of preference for quality and sensitivity to effort: competition can improve or worsen poverty depending on the model's parameters. Empirical findings for the three existing poverty lines ($1.9, $3.2, and $5.5) are consistent to a large extent with our theoretical results.
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